Other big players placed on notice

The wildcat dispute between private construction giant Grocon and the main building union over appointment of union site delegates has put other big players on notice in an industry already under pressure from fewer projects.

Future investment is seen at stake. The Construction, Mining, Forestry, and Energy Union blockades of Grocon sites are in a second week as fresh figures confirm the worst fears about the commercial building industry.

June-quarter construction figures show the sector suffering the most is commercial building, expected to be the biggest drag within the construction industry. Industry expectations are that decline will continue and even worsen in the next 12 months.

The outlook makes the CFMEU action at the Grocon sites – so far the $1.12 billion Myer Emporium project in Melbourne is the main target – look counter-cyclical. Building disputes are more likely, industry sources say, during a boom when there is more fat to meet union demands.

Even so, the Grocon situation is not isolated, and the construction union has been increasing pressure in recent months across the sector.

A key issue is who has the right to appoint shop stewards and safety representatives on sites. In the Grocon dispute, the union is pushing to appoint its own men, who will then be hired by the company.

Grocon chief executive Daniel Grollo said this week shop stewards would be elected among employees already hired on the job.

Other companies have also had to deal with this situation. Joe Barr, chief executive at construction major Hansen Yuncken, agreed the appointment of shop stewards was one of the most sensitive issues on big jobs.

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The approach at Hansen Yuncken, whose projects include the $1.8 billion Royal Adelaide Hospital project, was to appoint one of their own existing employees, who was usually a union person anyway, Mr Barr said.

“Otherwise you never know what you are up for," he said. “You get some trouble-maker on the job and it’s all over.

“The industry has got to treat this as an industry issue but it’s hard when you’re being targeted on a particular job. If the job’s not proceeding, you’re going to lose money on the job on a daily basis," he said.

Mr Barr said there was always a discussion with the union over the shop stewards appointed. “We’ve not found ourselves in a position where we haven’t agreed on who we are going to place on the jobs. Sometimes you might not have the people available. So if we have to hire someone, it is going to be a union representative."

Mr Barr said that health and safety issues were paramount on construction projects. But the position of safety representative was also open to abuse as well, he said.

Historically, the role had provided leverage for unions to mount an industrial campaign as projects reached a critical point in the construction process.

But it was “not a sustainable thing to cave in to all the demands", Mr Barr said. “At the moment, there was a mismatch between the union’s understanding of how heavily hit the industry was, and what they were demanding.

“It’s a short-term thing they are trying to get for their workers. In the long-term it could be to the workers’ detriment.

“In Victoria, if someone has to make a decision to invest in real estate they might think twice about doing that."

With an eye on the latest construction figures, Master Builders Australia chief executive
Wilhelm Harnisch
said the Grocon dispute carried implications for a sector that was already being squeezed.

“The first is that contractors will now be seriously reassessing the pricing of the industrial relations risk," Mr Harnisch said.

“What that means is tender prices will increase to cover that increased risk.

“The biggest concern for the industry is what the Grocon dispute will do in terms of investor confidence both in Australia and overseas.

“They will certainly be looking at this very carefully, and with margins and decisions based on what’s already low projected returns, it just simply runs the risk that investors will hold off."